Is Cash Still King: Why Firms Offer Non-Wage Compensation and the Implications for Shareholder Value

Wer

Paige Ouimet (The University of North Carolina at Chapel Hill)

Wo

IWH conference room

Zur Person

Paige Ouimet is Associate Professor of Finance and has several research projects looking at income inequality and the role of firms. She also has researched ESOP (employee share ownership plans) and employee stock options and their impact on labor productivity, wages and turnover. Her research agenda is concentrated at the juncture of finance and labor economics. She is interested in in how decisions studied in finance impact employee stakeholders – specifically how those effects are reflected in firm performance and, hence, corporate finance decisions.

Programm

Over the past 40 years, the share of non-wage benefits in employee compensation grew from 5% to 30%. Using disaggregated data from Glassdoor, we first document a series of stylized facts about the availability of non-wage benefits and how these benefits are correlated with firm characteristics. We propose that firms use certain non-wage benefits to attract and retain specific employee groups, a hypothesis we test with maternity benefits and female talent. As predicted, we find that in industries and states where women are under- represented and the supply of female talent is limited, firms offer better quality maternity benefits. We provide suggestive evidence that offering non ernity benefits is associated with more balanced gender employee composition.